By Al Root
Tesla often zigs when other companies zag. The latest example is electric vehicle pricing.
The company recently raised prices for some of its cars. The higher-end Model Y trims are up by $500 to $1,000. The Premium all-wheel drive version is now about $50,000. The standard rear-wheel-drive and all-wheel-drive versions still start at about $40,000 and $42,000, respectively. Model 3 prices look as if they stayed the same.
Tesla didn't respond to a request for comment about the increases.
Tesla hasn't raised Model Y prices in the U.S. since 2024, according to Barron's tracking. More EV competition and increased U.S. production capacity have kept a lid on pricing. What's more, the average price of a new EV is dropping since the September expiration of the $7,500 federal purchase tax credit.
Today, the average EV costs about $55,000, down from closer to $58,000 in September.
Still, Tesla could be raising prices because it sees strong demand for higher-end Model Ys. Or it could be trying to improve profit margins. Tesla's first-quarter automotive gross profit margin, excluding the impact of regulatory credit sales, was about 21%, up from 14% a year ago, but far from its first-quarter 2022 peak of about 32%.
The price hike comes at a tough time for EV sellers. U.S. EV sales fell by 27% in the first quarter from a year ago. EVs are likely to account for 5% to 6% of new car sales this year. They were closer to 10% in the third quarter of 2025, before the tax credit expired. Americans just haven't taken to EVs like buyers in other markets. EVs represent roughly 20% of new car sales in Europe.
The Model Y remains dominant in the U.S. Tesla sold 78,591 to Americans in the first quarter, up 23% from a year ago and accounting for 36% of all EV sales. The first quarter of 2025 was impacted by a model upgrade.
For 2026, Wall Street projects Tesla's global EV sales of about 1.7 million vehicles, similar to 2025. Tesla's EV sales peaked in 2023 at 1.8 million vehicles.
Investors probably shouldn't expect much stock reaction based on the hike. AI has driven Tesla's stock lately. The company is expanding its robo-taxi service, launched in Austin, Texas, in June, and is converting Fremont, Calif., Model S and X capacity to robot production this year.
Tesla recently stopped making the S and X to prepare for the changeover. Stopping production of popular models to pursue a new business is another example of Tesla doing things differently from other car companies.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 17, 2026 10:27 ET (14:27 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments